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Comment by danilocampos | Hacker News Reader

The abusive, overly-expensive and often insecure cartel of payment terminal/merchant account service providers.

I run an annual used ski equipment sale. We rent credit card machines and have a merchant account set up just for that weekend. We pay $0.22 + 1.79% per transaction. Our average transaction is >$100 so this is cheaper than what Square offers. Am I getting an unheard-of deal? Or is Square's rate really not that great?

You are not their target customer.

If my algebra is correct, Square's fee is lower for purchases under approximately $23. In your scenario where your average sale is higher than $23, you do end up paying more with Square. The article suggests that they're targeting coffee houses, casual restaurants, and other places where their average sale is below that threshold. That benefit is in addition to the lower cost of terminals and the added features supplied by their apps.

I guarantee that you don't have 1.79% + 22 cents for all transactions. You've got tiered pricing, which is mostly a bait and switch scam. http://feefighters.com/blog/tiered-pricing-for-merchant-acco...

If you'd like, you can email me your statement and I'll tell you what you're really paying

That rate is what our accountant told me to put into the accounting software. I didn't actually see the statement. I can tell your that our average transaction is $205 and it's all card-present. There were 1031 transactions over two days. Maybe the tiers average out to that rate.

How exactly are they disrupting that? They are significantly more expensive than my merchant services provider.

The only place they may have an edge is low volume, low price, transactions.

Disruptive technologies generally target early adopters first at a higher cost. Then once they move to a more mainstream market the prices drop.

Nope. Disruptive technologies generally serve underserved parts of the market (often those who can't afford the current solution) by providing a good enough solution. Then with scale and time, the disruptive technology matures enough to replace the incumbent. Edit: read http://en.m.wikipedia.org/wiki/Disruptive_technology

What kind of process did you go through to get your merchant account?

What kind of process does one go through to set up a Square account to take payments?

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